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Showing posts with label Best Spread Betting. Show all posts
Showing posts with label Best Spread Betting. Show all posts
Monday, August 15, 2016
Spread Betting Companies
Financial betting providers
Financial betting is sometimes integrated within gaming companies. There are also specialized financial betting firms, some of which might also provide financial spread betting and/or CFDs. As financial spread betting and CFD brokers are regulated by the UKs financial regulator the FSA and not gambling commission there are limitations on financial betting they can provide but all the brokers provide binary betting.Gaming companies providing financial betting include:
Other financial betting firms include:
Spread Trading
Spread Trading
Spread trading in futures is as old as the hills, yet it is an entirely new concept for most current traders in futures. In this introductory piece, we will show you that spreads can be the most conservative, safest way to trade in the futures markets.
But first, what exactly is a spread?
A Spread Defined
A spread is defined as the sale of one or more futures contracts and the purchase of one or more offsetting futures contracts. You can turn that around to say it the opposite way: “A spread is purchase of one or more futures contracts and the sale of one or more offsetting futures contracts. Either way you say it, it is a spread.
In finance, a spread trade (also known as relative value trade) is the simultaneous purchase of one security and sale of a related security, called legs, as a unit. Spread trades are usually executed with options or futures contracts
as the legs, but other securities are sometimes used. They are executed
to yield an overall net position whose value, called the spread, depends on the difference between the prices of the legs. Common spreads are priced and traded as a unit on futures exchanges rather than as individual legs, thus ensuring simultaneous execution and eliminating the execution risk of one leg executing but the other failing.
Spread trades are executed to attempt to profit from the widening or
narrowing of the spread, rather than from movement in the prices of the
legs directly. Spreads are either "bought" or "sold" depending on whether the trade will profit from the widening or narrowing of the spread.
Spread Trading Explained
Spread Betting
What is a Spread?
As in stock market trading, two prices are quoted for
spread bets - a price at which you can buy and a price at which you can sell.
The difference between the buy price and sell price is referred to as the spread.
The spread betting company profits from this spread, and this allows spread
bets to be made without commissions, unlike stock market trading.
A Basic Stock Market Trade vs. a
Spread Bet
Here we'll cover a practical example to illustrate the pros and cons of this derivative market and the mechanics of placing a bet. First we'll take an example in the stock market, and then we'll look at an equivalent spread bet.
Here we'll cover a practical example to illustrate the pros and cons of this derivative market and the mechanics of placing a bet. First we'll take an example in the stock market, and then we'll look at an equivalent spread bet.
For our stock market trade, let's
assume a purchase of 1,000 shares of Vodafone (LSE:VOD)
at £193.00. The price goes up to £195.00 and the position is closed, capturing
a gross profit of £2,000, having made £2 per share
on 1,000 shares. Note here several important points. Without the use of margin,
this would have required a large capital outlay of £193k. Also, normally
commissions would be charged to enter and exit the stock market trade. Finally,
the profit may be subject to capital
gains tax and stamp duty
Now, let's look at a comparable
spread bet. Making a spread bet on Vodafone, we'll assume with the bid offer
spread you can buy the bet at £193.00. In making this spread bet, the next step
is to decide what amount to commit per "point", the variable that
reflects the price move. The value of a point can vary. In this case we will
assume that one point equals a one pence change up or down in the Vodaphone share price. We'll now assume a buy or "up
bet" is taken on Vodaphone at a value of £10 per point. The share price of
Vodaphone rises from £193.00 to £195.00 as in the stock market example. In this
case the bet captured 200 points, meaning a profit of 200 x £10, or £2,000.
While the gross profit of £2,000 is
the same in the two examples, the spread bet differs in that there are usually
no commissions incurred to open or close the bet and no stamp duty or capital gains tax due. In the U.K. and some other
European countries, the profit from spread betting is free from tax.
However, while spread bettors do not
pay commissions they do suffer a bid offer spread, which may be substantially
wider than the spread in other markets.
Keep in mind also that the bettor
has to overcome the spread just to break even on a trade. Generally, the more
popular the security traded, the tighter the spread, lowering the entry cost.
In addition to the absence of
commissions and taxes, the other major benefit of spread betting is that the
required capital outlay is dramatically lower.
In the stock market trade, a deposit
of as much as £193k may have been required to enter the trade. In spread
betting, the required deposit amount varies, but for the purpose of this
example we will assume a required 5% deposit. This would have meant that a much
smaller £9650 deposit was required to take on the same amount of market exposure as in the stock market trade.The use of leverage works both ways, of course, and herein lies the danger
of spread betting. While you can quickly make a large amount of money on a
relatively small deposit, you can lose it just as fast. If the price of
Vodaphone fell in the above example, the bettor may eventually have been asked
to increase the deposit or even have had the position closed out automatically.
In such a situation, stock market traders
have the advantage of being able to wait out a down move in the market, if they
still believe price is eventually heading higher.
The Origin Of Financial Spread Betting
Spread Betting
Charles K. McNeil, a mathematics teacher who became a securities analyst and later a bookmaker in Chicago during the 1940s, has been widely credited with inventing spread betting. However, despite its American roots, spread betting is not currently legal in the United States.
Charles K. McNeil, a mathematics teacher who became a securities analyst and later a bookmaker in Chicago during the 1940s, has been widely credited with inventing spread betting. However, despite its American roots, spread betting is not currently legal in the United States.
Jumping forward roughly 30 years, on
the other side of the Atlantic, City of London investment banker Stuart Wheeler founded IG Index
in 1974, pioneering the industry by offering spread betting on gold.
At the time, the gold market was
prohibitively difficult to participate in for many, and spread betting provided
an easier way to speculate on it.
Thursday, August 11, 2016
Financial Spread Betting
WHAT IS SPREAD BETTING?
Spread betting is a way of investing in the movement of a particular market – like forex, shares or indices – without actually owning the asset. Spread betting allows you to take a position on whether you think a market will rise or fall, without having to buy the underlying asset. Importantly, spread betting is a leveraged product. This means you only have to put down a small deposit for a much larger market exposure. Betting using leverage means there are significant benefits and risks: your investment capital can go further, but you can also lose more than your initial deposit. Spread betting is flexible as it's possible to take short positions and deal on over 10,000 markets. However, it is important to understand the risks involved and have suitable risk management strategies in place. Is spread betting for me? Spread betting is suitable for: Active traders looking for tax-free profits* Shares traders looking to diversify their portfolios People who are interested in the markets and what affects them Those looking to add flexibility to their investment capital, through leverage. Spread betting enables you to speculate on the movement of a particular asset – like a currency pair, company stock or even an entire index – without actually owning the asset. With spread betting, you predict an outcome, and the degree to which you are right or wrong determines the size of your profit (or loss). Spread betting differs from alternatives such as fixed-odds betting, where you have a simple win/lose outcome and a pre-defined payout or loss. When financial spread betting, the outcome you're speculating on is the direction in which the price of a financial instrument will move. If it moves the way you predict, your profit will grow the further it goes. However, if the market moves against you, your loss will also increase as the price movement becomes greater.
Betting on the price increasing is referred to as going long, while betting that it will decrease is called going short (or ‘shorting’). How spread betting works When you spread bet, you’re betting on whether the price of an underlying asset will rise or fall. The spread There's a quote of two-way price on each market. This comprises the offer price and the bid price. The difference between these prices is known as the spread. If you think a market is set to rise you ‘buy’ at the offer (higher) price, and if you think the market is set to fall you ‘sell’ at the bid (lower) price. When you want to close a bet, you take the opposite action to when you opened it: buying if you sold, and selling if you bought. For that reason, the market price of your asset will have to move beyond the spread before any profit is made. The bet size The bet size is the amount you bet per unit of movement of the underlying market. You can choose your bet size, as long as it meets the minimum we accept for that market. Your profit or loss is the difference between the opening price and the closing price of the market, multiplied by the value of your bet.
Spread betting is a type of speculation that involves taking a bet on the
price movement of a security. A spread betting company quotes two prices, the
bid and offer price (also called the spread), and investors bet whether the
price of the underlying stock will be lower than the bid or higher than the
offer. The investor does not own the underlying stock in
spread betting, they simply speculate on the price movement of the stock.
Spread betting is a way of investing in the movement of a particular market – like forex, shares or indices – without actually owning the asset. Spread betting allows you to take a position on whether you think a market will rise or fall, without having to buy the underlying asset. Importantly, spread betting is a leveraged product. This means you only have to put down a small deposit for a much larger market exposure. Betting using leverage means there are significant benefits and risks: your investment capital can go further, but you can also lose more than your initial deposit. Spread betting is flexible as it's possible to take short positions and deal on over 10,000 markets. However, it is important to understand the risks involved and have suitable risk management strategies in place. Is spread betting for me? Spread betting is suitable for: Active traders looking for tax-free profits* Shares traders looking to diversify their portfolios People who are interested in the markets and what affects them Those looking to add flexibility to their investment capital, through leverage. Spread betting enables you to speculate on the movement of a particular asset – like a currency pair, company stock or even an entire index – without actually owning the asset. With spread betting, you predict an outcome, and the degree to which you are right or wrong determines the size of your profit (or loss). Spread betting differs from alternatives such as fixed-odds betting, where you have a simple win/lose outcome and a pre-defined payout or loss. When financial spread betting, the outcome you're speculating on is the direction in which the price of a financial instrument will move. If it moves the way you predict, your profit will grow the further it goes. However, if the market moves against you, your loss will also increase as the price movement becomes greater.
BREAKING
DOWN 'Spread Betting'
For example, assume that a
spread-betting company quotes a bid of $200 and an offer of $203 for ABC stock
and you believe that the price for ABC will be lower than $200. Since you
believe that the price of the stock would be go below $200, you could
"bet" $2 for every dollar that ABC falls below $200. Therefore, if
the stock price after a week came to $190 you would receive $20, but if the
price was $215 you would end up losing $30.
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